As of June 29, 2015, SunPower (SPWR) had total debt of $935.6 million. At the end of fiscal 2014, total debt was $1.18 billion. The debt consists primarily of convertible debt totaling $693.9 million. During 1H15, the company repurchased $324.3 million of convertible debt from lower-cost debt issued in fiscal 2014 to save on interest costs. Most of the convertible debt is subscribed by SPWR’s parent, Total (TOT). The company is in compliance with all of the relevant covenants.
SunPower also has certain agreements with suppliers to purchase raw materials and components. The company entered into these agreements to ensure the continuity of operations. The agreements are based on SunPower’s requirements for polysilicon, ingots, wafers, and renewable energy credits. Total future noncancelable purchase agreements amount to $1.92 billion over the next ten years. Purchase commitments for 2H15 stood at $713.3 million.
SunPower is moderately leveraged. Its total debt-to-fiscal 2014 EBITDA (earnings before interest, tax, depreciation, and amortization) came in at 3.8x, and its total debt-to-equity ratio came in at 0.57x. SunPower is considerably more leveraged than First Solar (FSLR), which boasts ratios of 0.57x and 0.06x, respectively. But its leverage is moderate when compared to that of peers (TAN) SunEdison (SUNE), Trina Solar (TSL), and SolarCity (SCTY). Also, the majority of the company’s debt is convertible. This puts it in a better position than more highly leveraged peers.